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Pharmaceutical Company Pulls Incentive Agreement with Durham, Will Still Build $31 Million Facility

The generic drugmaker Aurobindo Pharma U.S.A. Inc. will not longer be pursuing $200,000 in incentives through the city of Durham. The city was alerted to the agreement termination in a letter from the company on September 6. The city council was told today in an email from city manager Tom Bonfield.

The letter, from Ninad Deshpanday, the North Carolina president of research and development for Aurobindo, says the company still plans to "hire and invest" in Durham, but "some of the compliance requirements related to the agreement are not able to be met by us from a practicality standpoint or are not consistent with our company-wide practices."

In a September 2 email to Bonfield, the Office of Economic and Workforce Development notified him that Aurobindo was likely to end the agreement because of "included terms of the healthcare coverage for jobs and efforts to inform/include Durham-based firms in the construction efforts."

For each qualified job, according to the agreement drawn up by the city and presented in April, Aurobindo would have to pay 100 percent of the employee’s insurance premium and 50 percent of the premium for eligible dependents. That health care plan offered to employees hired in accordance with the agreement "shall be equal to or better than the healthcare benefit options offered to all other Company employees,” the agreement says.

The agreement would only pay out once the two hundred jobs were created (essentially $1,000 a piece) and the company’s $31.7 million new facility was completed. Since neither of those were realized, Aurobindo hadn’t received any incentive money.

In late April, Aurobindo announced that it would build its new R&D headquarters in Durham, which is expected to create 275 jobs total. It still plans on building that facility and is not at risk of losing $3.8 million in reimbursements from the state's Job Development Investment Grant program.

Bonfield says this was the first time he could recall a company asking for incentives, entering an agreement to get them, terminating the contract but still staying in the city.

"That's their decision," Bonfield told the INDY Thursday. "They decided they'd rather not follow those requirements."

Durham County also approved $200,000 in incentives for Aurobindo. It’s unclear if the agreement with the county has likewise been terminated. The INDY has reached out to the county and is waiting to hear back.